Money managers brace as a record El Niño forms (opens the source in a new tab)
- Forecasters see a very strong El Niño likely lasting into early 2027; Pictet’s Katie Self says it is almost certain to be the most extreme on record, with knock-on effects everywhere.
- It is already fanning droughts and floods: India had its weakest monsoon in more than a decade, food commodity prices are rising, and economists are revising inflation and deficit forecasts.
- T. Rowe Price uses custom models to shield its $165bn emerging-market portfolio, and an Anthropocene Fixed Income Institute note names Indonesia, Brazil and Colombia as the most exposed sovereigns.
- Early 2027
- strong El Niño likely lasts until
- $165bn
- T. Rowe portfolio being shielded
Why it matters Weather is becoming a macro variable: a strong El Niño can lift food inflation just as high debt leaves governments little room to cushion it, and India feels it through the monsoon.
Other side El Niño cycles are not new and markets have lived through them; forecasters see the odds of a strong event fading through the first half of 2027.